Former Children's Place CEO Files Complaint

Ezra Dabah, the former CEO of troubled children's retailer (see earlier blog post) and the largest shareholder of The Children's Place PLCE (NASDAQ), continues to pressure the company. Dabah who was previously forced out as CEO has been seeking with the help of a private equity investor to buyout the firm. A Business Week story last Friday talked specifically about Dahah's latest move, the filing of a complaint with the SEC.

Dabah requested that the company hold its annual meeting within 45 days of his filing the complaint. The meeting is currently scheduled for June 27. The last meeting was held June 22, 2006. "There is no reason to delay the annual meeting for another four months," Dabah said in the filing with the Securities and Exchange Commission.

Stay tuned as the company's saga grows.

For more:

Dealscape 3/24
Reuters
Dealscape

Scorned CEO Striking Back?

Ezra Dabah, the former CEO and still major shareholder of The Children's Place PLCE (NASDAQ) (approximately 17%), appears to be ready to make good on previous statements he planned to make a bid for the company. According to Crain's New York Business Dabah who was forced out as the company's CEO back in September 2007 (see earlier blog) recently sent a letter to the SEC,

revealing his intentions to offer, along with Golden Gate Private Equity Inc., $24 per share in cash for Children's Place.The letter seeks the board's permission to bypass certain Delaware shareholder acquisition laws that could otherwise preclude Golden Gate's participation in an offer.

The offer would be a 35% premium over Wednesday's closing price of $17.78. As of Dec. 13, Mr. Dabah owned about 5 million shares, or 17.2% of total shares outstanding. The total value of the potential offer is based on 24.1 million outstanding shares Mr. Dabah doesn't already own.

This is all happening at the same time that the company released a surprising same store sales report for January which saw a 6% increase over same month in 2007. The increase was especially surprising, considering the troubled retail market and the turmoil the company has been undergoing for the last number of months. To complicate matters, The Children's Place also recently received a Nasdaq delisting notice regarding its failure to hold its annual stockholder meeting by Feb. 3. The Company noted its request for an extension and noted the delay in filing their annual report as the reason for the delinquent meeting.

It's hard to sort through it all. Is the scorned CEO looking to get his revenge or is this just a smart move? Keep a close eye on the firm.

Zale Jewelers Trys to Shine With New CEO

Zale Corporation ZLC (NYSE), the long troubled North American specialty jewelry retailer, announced the resignation of its current CEO, Betsy Burton along with the appointment of her replacement Neal Goldberg, who had previously served as President of the troubled children's retailer, The Children's Place Retail Stores. The management change comes in the wake of increased activist (hedge funds - Breeden Capital, Citadel LP, SAC all of whom made 13D filings) involvement in the company and a continuing decline in the company's performance despite a real change in corporate strategy.

Burton had only been CEO since February 2007 and served as acting CEO since February 2006. She has been on the company's board since 2003. Just as her replacement Neal Goldberg, Burton had an extensive retailing background. At the time she had been appointed as permanent CEO, Richard C. Marcus who was the Chairman of the Board said,

"Betsy has done a superb job running the Company since February. Under her leadership, we are moving forward with a customer-centric strategy that leverages our fundamental strengths to regain market share, improve profitability and create value for shareholders. Betsy is an experienced executive with an outstanding record of leadership and a deep knowledge of Zale. Along with the strong management team we have put in place in recent months, Zale now has the right leadership to realize our long-term growth potential."

Burton went on to shift the focus of the firm back to its more original retail strategy. According to the Dallas Morning News, Burton while interim CEO was quoted saying,

...the company believes the plan adopted by Leonard and former Zale CEO Mary Forte, who quit January 30, to market to higher-income customers and try to get product direct from foreign suppliers had not worked, and the company would go back to targeting average-income Americans.

Since Marcus's announcement on the appointment of Burton, a new Chairman, John B. Lowe Jr., has taken over and numerous management changes have occurred and yet, the company has continued to under-perform. In today's announcement, the new Chairman, John B. Lowe Jr., said Goldberg,

"has a unique combination of retail experience, leadership and team-building skills, and talent to move the company forward, building on the progress that has already been achieved."

Different Chairman same sentiments as when Burton was appointed. While Goldberg appears to have the right background and experience, he is coming from another retailer that recently has been under the gun (check the blog). The real question for me is what do the activist shareholders, who hold over 18% of the stock, plan to do? Zale has been floundering for a long time despite continuing efforts to turn itself around.

Stay tuned and make sure to watch both Goldberg and the outside activist investors (Breeden, Citadel and SAC).

For more see:

Reuters
Businessweek
Dallas Morning News
JCKonline.com
Diamond Intelligence Briefs
Houston Chronicle
Gerson Lehrman Group
Streetinsider.com 13D Tracker